Retiring is Old School, Plan for Stress-free Income Instead – Here’s How

Retiring is Old School, Plan for Stress-free Income Instead – Here’s How:

(image source: Shutterstock)

Imagine this – its 6 am, and you wake up for another exciting day. You go for a workout, enjoy a tasty, nutritious breakfast, finish up some household chores, and take a small afternoon nap after relishing your lunch.

In the evening, you sit around with your family and share some warm conversations. While your loved ones laugh and share jokes, you sit back, relax and watch their content, happy faces.

Amidst all these memories, calm is in abundance and stress is practically non-existent. It all does sound wishful now, doesn’t it? However, this dream could easily be your reality after retirement. All you have to do is plan a retirement that gives you stress-free income for the years to come.

The key to having a stress-free retirement is to accumulate sufficient assets in your working years. Once you stop working for money, you need to put the money you accumulated to start working for you.

This way, when you retire, these funds will start working to provide you with an income that will not only help maintain your desired standard of living but will also suffice your retirement.

The first challenge here would be to make investments that are inflation-proof since rising prices will easily devalue your accumulated wealth. Therefore, you must factor in inflation when you start planning your retirement.

Moreover, you must plan your retirement with an appropriate asset allocation strategy that comprises investments into equities, debt funds, real estate, gold and other alternative investments. Doing so will help you maximise your investments while limiting your risks.

Overall, you must remember that volatile markets and fluctuating interest rates, both can dampen your retirement wealth. Therefore, the earlier you recognise these shortfalls and take steps against them, the better it will be for you and your life goals.

Monetize Your Ideas

In your earning years, you must review and re-balance your investment portfolio regularly. With some diligent planning, it will not be much difficult to plan, revamp and monetize your investments, to create steady income sources.

Moreover, you should always invest a portion of your savings in equity-linked instruments for more significant long-term proceeds. Whether it is ULIPs or mutual funds, equity instruments are ideal long-term investment plans, offering higher returns than those earned through traditional retirement avenues such as fixed deposits and PPFs. As you near retirement, you can also look to gradually de-risk by investing partially into debt instruments as per your risk appetite.

Invest for Long Term Wealth

Retirement planning is necessarily a continuous process that thrives on an appropriate asset allocation strategy. Therefore, you must start investing early in your working life and maximising your portfolio by including a variety of investment options in the long term.

You can allocate your savings into different market-linked investments, depending on their risk profile. Moreover, once the accumulation period ends, you must chalk out your annuity income and ensure regular cash flows.

If you are not sure about your expected annual expenses and liabilities post-retirement, you may start by maintaining an actual statement of your expenses. Doing so will help you calculate your average monthly lifestyle cost.

Once you have determined how much you would need from your accumulated savings in the first five years of retirement, you may start to shift that money into low-risk, more conservative instruments to make sure that you have that five-year runway.

Moreover, you should invest a portion of your savings in capital growth asset class too, after you have adequate liquid cash to cover your new lifestyle expenses. That said, you must monitor your portfolio’s performance every year and factor in any significant market changes or life goals.

Re-balancing portfolios, hence, helps ensure that your investments do not over-emphasise on any specific asset category. It is by shifting your investments from over-weighted classes into under-weighted categories that you can ensure continual profits post-retirement and escape longevity risk.

A Stress-free Retirement Can Be Your Reality!

All of us dream of retiring rich and content. However, it takes more than just wishful thinking to realise this dream into reality. You need to plan for your retirement and invest for the long run towards that goal.

This strategy requires a focus on both investing and saving. Therefore, you must balance your risk tolerance over an extended investment horizon and align your investment plan with your retirement goals. Reputable insurers such as Max Life Insurance offer a variety of long-term investment plans such as ULIPs and retirement plans. Out of these, a ULIP policy is considered as the best insurance policy for investment.

In other words, ULIP investments help protect your present and provide for your retirement, all under a single plan. But most importantly, ULIPs help diversify your asset allocation across funds with varying risk profiles, so that you can maximise your returns regardless of the market volatility.